Ford & Volkswagen Collaboration with Argo AI Could Value the Self-Driving Startup at $4 Billion

resource from: Bloomberg   

Ford Motor Co. and Volkswagen AG are inching closer towards an agreement to collaborate on self-driving cars together with Argo AI, Ford's self-driving unit. According to a report from Bloomberg, the two automakers have overcome earlier obstacles, according to people familiar with the talks.

The companies found common ground Thursday on a structure to jointly bring self-driving cars to market, the people said.

Emerging from deliberations on Thursday includes plans about a possible framework for Volkswagen to work with and invest in Argo AI, the autonomous driving startup Ford invested $1 billion according to Bloomberg. The people  asked not to be identified because the talks were private. The automakers discussed an approximate valuation of $4 billion for Argo AI, one of the people said.

Volkswagen continues to be in constructive talks with Ford, a spokesman for the automaker said. A spokeswoman for Ford told Bloomberg that the discussions are ongoing and have been productive over certain aspects of the potential working partnership.

The two automakers have already agreed to a deal in early January to jointly produce commercial commercial vans and trucks.

Any working relationship between the two automakers might make Ford and Volkswagen big players in the self-driving car race, challenging Alphabet's Waymo division and the General Motors' partnership with San Francisco-based Cruise. GM purchased Cruise for for an undisclosed sum in 2016, but at the time it was reported to be between $580 million and $1 billion. However, the stakes are heating up.

In May 2018, GM invested another $1.1 billion in Cruise after Softbank's Vision Fund and Japan's Honda Motor Co. agreed to invest a combined $5 billion in the self-driving startup. The money flowing into self-driving startups indicate just how valuable the technology is to automakers.

Volkswagen is the world's largest carmaker, and together with Ford and potential deal would create a global company big enough to take on the likes of Alphabet Inc.'s Waymo and General Motors' GM Cruise unit.

"The opportunity here is substantial," said Michelle Krebs, senior analyst for Autotrader to Bloomberg. "You get economies of scale, and VW has an immense global footprint and vast breadth of products."

Although an agreement could be finalized in the next few months, there are still many things to work out. People that attended the meeting at Ford's headquarters in Dearborn, Michigan said that the talks can still breakdown.

The framework Volkswagen and Ford are discussing would give each partner equal ownership of the self-driving software, the people said. Volkswagen CEO Herbert Diess said in January his company is "committed" to owning the software stack that will control self-driving cars, and the arrangement with Ford would address this, the people said.

Volkswagen's potential investment in Argo might include the sharing of the automaker's highly regarded MEB modular electric vehicle platform. Ford has its own battery-powered platform set debut this year in a sporty electric SUV with a 300-mile range. However Ford can extend is global reach into EV markets in Europe and China by tapping into Volkswagen's EV platform the people said.

The arrangement between the three companies has the potential to jump-start efforts to compete in a mobility as a service (MaaS) market Ford CEO Jim Hackett has estimated will one day might be worth $10 trillion.

"There's not going to be 10 winners in this space when we look back," Hackett told analysts last year. "There's going to be a few, and we plan on being one of them."

resource from: Bloomberg

FutureCar Staff